It's simple supply and demand. Lots of people want to live in the popular districts of big popular cities, but the supply is strictly limited (you can't simply build a ton of extra houses in an old neighbourhood in a city center), so prices go through the roof.

You don't have to live there. You can commute. And if it gets too hard to find good people in London because both the rent and the commute are terrible, companies will eventually open offices in more fertile areas.